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KFF on Premiums in the Exchanges

By September 19, 2013Commentary

We are less than 3 weeks before enrollment is supposed to be available for the new health insurance exchanges created by the reform law, although the feds are already hedging on what will really be available on October 1.  A number of insurers have said they will or won’t participate in various states and there have been premium filings that are public in several states.  It is hard to compare premiums on the exchanges and off because of the new benefit design categories and mandates.  A Kaiser analysis examines the filings in 17 states and DC.   (KFF Analysis)   One thing to note is that no one appears to be offering higher level benefit plans–the gold and platinum, probably out of very reasonable fears that adverse selection and a bad risk pool would result.  While there are many offerings of bronze and silver plans, these have relatively high levels of consumer cost-sharing, as the plan only has to on average cover 60% of health care costs.  This means the consumer gets to pay the premium and 40% of the cost of his or her health insurance.  The number of insurers ranges from 2 to 11 in a state, with many having a relatively low number so it is unclear what the effect of competition will be.  Subsidies are tied to the premiums of the second lowest-cost silver plan, and there is substantial variation within and between states in premiums.  While many consumers will be eligible for subsidies, most will still face a hefty premium bill, from $1500 a year at the low end to several thousand at the higher.  Many of these individuals have either had employment-based insurance or no coverage, so they are likely going to be diverting spending from some other category to health insurance.  While the authors put a happy face on the situation by saying it looks like premiums will be lower than expected on average, the consumers who are mandated to enroll and pay these bills are not going to be joyous.

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